Norman Y. Mineta
Secretary of Transportation

MR. GAMBLE: The first question, Mr. Secretary, is the following. The airlines are in crisis right now, it seems that's all we read about lately, flights are packed, but the airlines seem to be in crisis. Was deregulation the right thing to do in terms of service to the public?

SEC. MINETA: There's no question in my mind that in 1978 the Congress did take the right action in deregulating the airline industry. The -- when you look at fares today as compared to what they were in the years prior to deregulation the fares are much lower today, the frequency of service is much greater today than before and with the ease of the new entrant carriers being able to come into the marketplace based on the financial stability of the new entrant carriers.

I think one of the problems that we're seeing now is the shift in the paradigm of how airlines operate. They're going from the hub and spoke operation of the carriers to point to point. And the problem is that the legacy carriers, the six major carriers, United, American, Delta, Northwest, U.S. Airways and Continental, have invested in that hub and spoke operation. And so they're getting the pressure of both low fare carriers competing against them as well as the pressure of their higher cost of a hub and spoke operation. And so they're trying to make that shift from being a hub and spoke to become more point to point and yet that is gonna take a little while to do that shift. But in the meantime fuel costs are eating up -- fuel cost increases are eating up whatever efficiencies they're able to get from shifting from a hub and spoke to more of a point to point carrier operation. So the book is still open as to what's going to happen with certain carriers.

Now I meet regularly with the financial analysts around the country who follow aviation and I think if you were to ask them they would probably say that there are probably still a couple of more carriers that may end up in chapter 11 by the end of the year.

MR. GAMBLE: You talked about aviation, in terms of transportation opportunities specifically for Alaskans, does a U.S./Canada link up for rail make any sense to you at this time?

SEC. MINETA: Well, I haven't seen any of the economic studies that Premier Fentie and Governor Murkowski were talking about, but what they're thinking about is a rail line that would also include within its right-of-way pipelines as well as traditional communication hard line as well. So they're trying to make the right-of-way for that rail to be useable for many other forms of communication. So -- and I haven't seen the economic studies of the financial feasibility of having that kind of a multiple prong approach to the basic thrust of building a trans Alaska/Canada to the Lower 48 rail program. So from a feasibility study I'm not sure how it looks, but I know that what they're trying to do is to make it possible to use the right-of-way for pipeline, for rail and for communication hard wire as well.

MR. GAMBLE: You all have heard former Governor Hickel talk many times about actually this being just but a small step in a large effort to link rail through the Bering -- under the Bering and into Europe and as a visionary would look well out into the future, look at the economic prospects that such a linkage would bring and Alaska would play an important part in that.

Mag rail, talking about rail, one of our questioners cited the mag rail system proposal between California and Las Vegas and is asking would the government fund other magnetic rail systems in other parts of the U.S., looking at pollution versus cost of operations and some of the pluses and minuses, what's the future of mag rail or other technology that's out there?

SEC. MINETA: Next question. Mag rail was authorized about 10 years ago by the Congress and they -- with the submissions that came in from various communities and states, they were eventually narrowed down about five, six years ago to two proposals for the development of magnetic levitation. One was a system in Pittsburgh, Pennsylvania and the other was from Boston -- I mean -- I'm sorry, Baltimore to Washington, D.C. Now there is no commercial mag lev operation in the world, the longest mag lev operation is the test track in Germany that's about 40 kilometers. And generally speaking when you think about the construction costs of mag lev on a per mile basis it is very, very expensive and the question of whether or not it can operate without further subsidies is really questionable.

Now, on the other hand, there are efforts to try to get high speed rail. When you think about mag lev you're thinking about maybe, I'd say, 250 to 300 miles an hour. The system that is in Shanghai that was just completed late 2004 is roughly 14 miles long and it's really more sort of like an amusement ride although it connects a certain part of Shanghai, the Poo Dong area, to the airport, the Poo Dong airport, Shanghai airport, but it's only 14 miles long and it is a system that goes roughly 350, 360 kilometers so that would be roughly 225 miles an hour, I guess.

The other alternative is high speed rail and there are many efforts going on right now to try to get high speed rail which is roughly 150 miles an hour, 150 to 160 miles an hour. Right now the highest any U.S. train will go is 125. And the problem is that U.S. passenger rail cars are running on freight railroad lines except for some parts of the northeast corridor that are owned by Amtrack itself. But -- and freight rail is only interested in going 79 miles per hour and so when you want to get up to 150 you have to pay the freight rail people the maintenance cost and the capital cost of going from 79 miles per hour to the 150. And that's very, very expensive, at least by our standards today, much, much less than mag lev.

So I think the alternative that most people are thinking about is high speed rail rather than mag lev because the capital costs are so great. As I recall I think it's somewhere about -- when you think about the capital costs involving the cars it's what, itself, it works out to something like $1.1 billion a mile. So it's very, very expensive in terms of the kind of capital cost that would be involved and the issue is can you recover that from the fare box and not get into a very large subsidized program.

MR. GAMBLE: I just saw the railroad gang at the table over there sit up straight when we talked about a $1.1 billion subsidy per mile. The mind boggles with the thought of what one could do with that kind of money. Many years ago the U.S. stepped up to a leadership role in building a very visionary project in the Panama Canal. The question we have is should we take a similar leadership role in developing Arctic shipping?

SEC. MINETA: One of the major programs that we've been looking at since we came into office has been this whole idea of short sea shipping. And I always have to be very careful when I say that because try to say short sea shipping very quickly. Because the highways are so crowded, whether it's I-5 on the west coast or I-95 on the east coast, one of the things that we would like to do is to see whether or not there's a possibility of increasing the use of marine transportation. And I set up the MTSNAC, the Marine Transportation System National Advisory Commission, to find out if there's some way that we can really use marine transportation as a way to relieve our surface transportation in the country. And the Arctic and the Bering Sea is not excluded in terms of that study.

And so what we're doing right now is engaging the Office of Management & Budget on this proposal right now because we think there are ways to take the ports that are on the east cost -- west coast, east coast and use those ports to increase the amount of goods that are traveling and at the same time relieve some of the highway congestion that exists including the use of the Mississippi, the Missouri, the Ohio, Tennessee, the Great Lakes, and utilize all of that in terms of a marine transportation system to increase the amount of travel or transportation that would be available. So again the Arctic would be considered a major component of that as well.

MR. GAMBLE: Mr. Secretary, I've got about three questions here I'll try to roll up into one. Alaska is a late blooming area that is still developing, very much developing much like many of the other states did across the United States in their history many, many years ago. We've got our own development that's going on and it's still currently going on, I mean, our pioneers in Alaska are still alive. As former Governor Hickel also likes to say, access in Alaska is everything. Without access you have nothing in Alaska and so much of what we do is about access. And from that comes many economic benefits. We lack road access, many of our airfields are the only access into small towns as well as rivers and then we have the railroad. And as Alaska tries to develop that access, it's asking the federal government for assistance.

Many people look at that and say Alaska's getting more than its fair share of a transportation budget that is very competitive without thinking about the fact that Alaska is going through this growth phase. How do we balance that and do you think Alaska's getting its fair share or is it getting more than its fair share, do you support the development of Alaska and those economic benefits that come from it to the point where the capital dollars are worth the investment?

SEC. MINETA: Well, there's no question that the capital investment is well worth the investment here in Cali- -- in -- not California, that shows you my prejudices, I guess, in Alaska. The natural resources that you have yet to develop are tremendous and we know the potential of that and that can only be served with transportation. So there is no question that there is emphasis on giving Alaska its -- and if you look at the highway formula as an example or transportation dollars in general, you will find that Alaska does very, very well. And I know that when I first came in here there were a group of protestors outside who were in opposition -- who are in opposition to one of the programs that we're funding and what we have funded is roughly $5 million towards the draft environmental impact statement and that's the Knik Bridge.

And so I know that there are a number of things that Alaska has initiated that we're working with the state on that may be controversial, but I think that we have to explore these different avenues of approaches and see from an environmental impact statement perspective as to whether or not we want to be doing these things in the future.

So we don't exclude any of these opportunities, but we want to make sure that where we spend our money is a good investment, but we also recognize the vast potential that exists here in Alaska as it relates especially to the development of its natural resources.